8 June, AtoZForex – The New Zealand dollar is strengthening as markets await the June RBNZ cash rate decision. On the other hand, having cut rates to record lows last month, the Reserve Bank of Australia opted to keep the official cash rate on hold at 1.75% in June. The Central bank signaled an unwillingness to cut rates further for now as recent data depicts continuing economic growth. While inflation is weak and expected to remain so for some time due to low wages growth and cost pressures elsewhere.
Japan economy expands
So far today, the yen has been a big mover, with volatile moves after reports show that Japan’s economy expanded a tad more than the government initially reported for the first quarter. Thanks to a fractional revision in private consumption and business investment that dropped less than initially thought. The revised data showed Gross domestic product grew by an annualized 1.9 percent in the three months ended March 31, more than a preliminary reading of 1.7 percent. The yen initially showed strength after the data, only to give back much of the gains.
For the rest of the day, data from UK is set to take center stage, along with the Reserve Bank of New Zealand rate decision and US crude oil inventories report.
UK Manufacturing Production m/m (8:30 A.M GMT)
The manufacturing production data last month showed a change in the total inflation-adjusted value of output produced by manufacturers at 0.1%. The latest report is forecast to come flat at 0.0% as manufacturing activities seem to be slowing in the UK. However, the major concern for the country right now is the June 23 European Union referendum. The pound remains bearish on aggregate, hence a negative manufacturing data will fuel a fall in the currency.
RBNZ cash rate
The Reserve Bank of New Zealand (RBNZ) could announce a second rate cut this year, as some economist expect a drop to 2.00% from 2.25%. In its last statement, the bank noted that further policy easing may be required in months to come, in a bid to make sure that the pace of inflation reaches the middle of the target range. As inflation remains weak mostly due to low energy and import prices. On Thursday, we also have RBNZ Gov Wheeler due to testify on the Monetary Policy Statement before the Finance and Expenditure Select Committee.
Think we missed something? Let us know down in the comments section.